Musk warns Twitter deal ‘cannot move forward’ without proof of number of bot accounts
Elon Musk gave his strongest hint yet that he would walk away from buying Twitter, after tweeting the deal ‘cannot move forward’ unless his conditions are met.
The Tesla chief executive offered to buy the site for £35billion in April but is now warring with its chief executive Parag Agrawal over the number of fake accounts on the social media platform.
Twitter says 5 per cent of its 229million accounts are bots, but Musk thinks the true figure is ‘much higher’ at around 20 per cent.
Conditions: Tesla boss Elon Musk (pictured) offered to buy Twitter for £35bn in April but is now warring with chief exec Parag Agrawal over the number of fake accounts
The billionaire tweeted: ‘My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s chief executive publicly refused to show proof of (less than) 5 per cent.
This deal cannot move forward until he does.’ Musk shocked the business world last month after striking a lightning quick deal to buy Twitter for $54.20 a share.
But doubts over the deal started to emerge on Friday after Musk said his acquisition was ‘temporarily on hold’ until he could see more detail on how Twitter arrived at its estimate for the number of fake accounts.
On Monday, Musk told a Miami tech conference that an agreement at a lower price wouldn’t be ‘out of the question’.
But Twitter is trying to force the deal through at the original price.
In an SEC filing submitted hours after Musk’s tweet yesterday, the social media platform said it is committed to completing the transaction on the agreed price.
If Musk does back out, he would have to pay Twitter an £800million termination fee, a fraction of his approximate £212billion net worth. Twitter could also sue for damages.
Musk is either regretting his original offer and will stump up the £800million fee to exit the deal, or re-negotiate on price, predict analysts.
Daniel Ives, analyst at Wedbush Securities, said that ‘the chances of a deal ultimately getting done is not looking good now’.
He added: ‘It’s likely a 60 per cent chance from our view Musk ultimately walks from the deal and pays the breakup fee.’
Social media consultant and industry analyst Matt Navarra tweeted that Musk is stalling the deal as a pretext to renegotiating the price.
Regulatory filings show Musk mulled over taking Twitter private as early as March 27 – more than a week before his initial 9.2 per cent stake was disclosed and more than two weeks before he publicly declared his bid.
Shares in Twitter are now considerably lower than when Musk made the deal for $54.20 a share in April. They closed in New York on Monday at $37.39 but were up 1.1 per cent at $37.80 yesterday.
If Musk does walk away from the deal then the stock could fall even further to less than $30 a share, given how shaky stock markets are right now, says Ives.